Ruling indicates judicial curbs on politics

PUBLISHED : Saturday, 12 November, 1994, 12:00am
UPDATED : Saturday, 12 November, 1994, 12:00am

TO even the most blinkered observer there never seemed much doubt that Britain's GBP234 million (HK$2.9 billion) aid for Malaysia's Pergau dam was linked to arms sales.

It was, in the words of the the head of the Overseas Development Administration (ODA) Sir Tim Lancaster 'a very bad buy'.

The objectives of the aid programme under a 1980 act are to 'promote sustainable economic and social development and good government to reduce poverty, deprivation and to improve the quality of life for poor people'.

The World Development Movement, which took the Government to court, argued that it did not meet those criteria and was thus a misuse of public funds.

They did not have to look far for an official view. The head of the ODA, Sir Tim, had for long argued that Pergau was uneconomic and only marginally acceptable at a price at least a third less than the eventual GBP417 million it will cost.

The issue before the High Court court was not the link to arms sales - but purely an examination of Pergau itself. It ruled that Pergau was uneconomic, would be a drain on the people of Malaysia and thus could not be said to meet the criteria of promoting development in that country. It was for the court to decide whether Foreign Secretary Douglas Hurd, in sanctioning the aid, had acted within the law. He had not.

There is no question now of aid for Pergau being stopped. The Government will find cash from another area to fund it. There is also no real question of Mr Hurd resigning - the big player, who first sanctioned Pergau and took the Government down the path of tacitly linking aid to arms sales was Margaret Thatcher.

The decision by the High Court has another effect though - it illustrates the British judiciary's increasing readiness to curb the powers of the executive, in effect standing in for a parliament which has become less capable of doing so.

Apart from this week's ruling over Pergau, the Government has suffered at least three defeats in the courts this year. Senior judges regularly express irritation at rushed legislation and poor draftsmanship.

The Pergau affair started in March 1988 when the then Defence Secretary Lord Younger gave a reassurance that Malaysia was eligible for 'non-military' British aid without bothering to check with the Foreign Office.

Lady Thatcher promised to provide financial help for the dam in 1989 while negotiating a GBP1.3 billion arms deal.

Malaysia went on to order 28 British Aerospace Hawks worth GBP403 million then in March 1991 the contract to build the dam was won by an all-British joint venture.

But the ODA, which is responsible for overseeing Britain's aid budget concluded that the dam project was bad value. Sir Tim said he was only prepared to sanction the GBP234 million in aid on the direction of the Foreign Secretary.

Mr Hurd went ahead and authorised the first payment in July 1991 and with Prime Minister John Major overruled ODA objections. Their rationale was that both felt they must honour Lady Thatcher's pledge.

Whether one agrees with arms sales to developing countries or not, Pergau has proved an enormous embarrassment to the British Government.